CRA Publishes Changes To 2007 Income Tax And Benefit Return

by Mike Godfrey, Tax-News.com, Washington

19 February 2008

The Canada Revenue Agency (CRA) this week published details regarding changes to the 2007 individual income tax and benefit return.

Further information was provided on the following topics:

Lowest tax rate – The lowest tax rate has been reduced to 15% for 2007. This rate also applies when calculating federal non-refundable tax credits.

Federal non-refundable tax credits – The following changes have been made to the amounts used in calculating federal non-refundable tax credits:

• Basic personal amount – The basic personal amount has increased to USD9,600. Individuals with taxable income in 2007 up to this amount will not have to pay federal income tax.
• Spouse or common-law partner amount – People may be able to claim this amount if, at any time in the year, if a spouse or common-law partner was supported by an individual and his or her net income for 2007 was less than USD9,600.
• Public transit amount – Individuals can claim the cost of monthly or longer duration public transit passes for travel within Canada. The cost of shorter duration passes can also be claimed if each pass entitles the user to unlimited travel for an uninterrupted period of at least five days and the user purchases enough of these passes so that they are entitled to unlimited travel for at least 20 days in any 28-day period. Individuals can also claim the cost of electronic payment cards when used to make at least 32 one-way trips during an uninterrupted period not exceeding 31 days.
• Pension income splitting – Eligible individuals may be able to allocate up to half of their pension income that qualifies for the pension income tax credit to their lower-income spouse or common-law partner.
• Meal and beverage expenses for long-haul truck drivers – The deductible part of certain meal and beverage expenses for long-haul truck drivers, incurred during an eligible travel period after March 18, 2007, has increased.
• Registered retirement savings plan (RRSP) – The age limit for contributing to an RRSP has increased from 69 to 71.
• Working Income Tax Benefit (WITB) – Individuals and families with low incomes may be able to claim the WITB, which includes a supplement for individuals who are entitled to the disability tax credit. Eligible individuals and families can also apply for advance payment of up to one half of their estimated 2008 WITB using Form RC201, Working Income Tax Benefit Advance Payments Application for 2008.

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